Irish households and businesses under pressure as wholesale gas and oil prices rise again
The fallout from escalating tensions around Ukraine is expected to keep pressure on living standards for Irish households, as the wholesale price of gas and crude oil rose again on Wednesday.
Analysts fear further escalation could lead to sanctions on gas, oil and foodstuffs such as wheat, even though Western Europe and Russia are mutually dependent on each other as customers and a major supplier of energy and food.
The wholesale price of European gas rose again in session by more than 10%.
The gas contract for March delivery traded at more than €88 per megawatt hour, according to the Intercontinental Exchange (ICE) in London. For June, the contract was trading at €87.35, up 11% on the day, suggesting there is no easing in inflationary pressures.
Gas can account for around 40% of all the energy generated on the electricity grid across Ireland.
Economists fear that inflation could rise further if tensions over Ukraine do not ease. Russia is a major exporter of oil and gas and, together with Ukraine, supplies large quantities of wheat to world markets. The price of many commodities rose on Wednesday, with wheat up 1.75%, lumber up 2.4% and coffee prices up 1.7%.
Household debt advocates have said the government will be forced to review and increase its assistance to households, well ahead of the October budget.
It announced only two weeks ago an envelope of 505 million euros to help households cope with soaring electricity and heating bills. The package included an increase to €200 in the domestic energy credit; a fixed fuel allowance of €125; a 20% reduction in transport prices from the end of April, and a reduction in the ceilings for school transport costs.
However, Paul Joyce, senior policy adviser at the Free Legal Advice Centers (Flac), said “continuous reviews” of household bills will be needed as the Ukraine crisis has further increased energy costs since February 10.
“It’s a pretty deplorable situation,” if the €505million package is meant to remain unchanged until October, Mr Joyce said. He called for the creation of an NPHET-like agency for the government to monitor price increases in all areas.
Tricia Keilthy, social policy development manager at St Vincent de Paul (SVP), said “more resources are more urgent than ever” for low-income households.
The SVP supports the expansion of fuel allowances and discretionary funds for the most vulnerable households to target resources to those most in need of the measures.
The price of wholesale gas has risen by 10% since the government announced its improved package on February 10, according to calculations by the Irish Examiner. The price of crude oil, which traded at $98.30 a barrel on Wednesday, has risen 7.5% over the past two weeks.